Africa: US launches COVID-19 recovery financing for sub Saharan Africa

The US Government has created a multi-billion regional fund that targets small and medium sized companies together with projects that support economic recovery in the wake of COVID-19.

It comes as great relief to companies in Kenya that have taken a hit from the effects of the Corona virus pandemic where most have implemented drastic measures to keep them from going under on account of massive revenue losses.

This has resulted in loss of jobs and livelihoods to thousands of people affiliated with the gravely affected companies.

But now things could take a different turn for the struggling businesses and projects as the US International Development Finance Corporation (DFC) has created the first Sub-Saharan Africa Digital Deal Room which seeks to fund applicants seeking between Sh300 million and Sh5 billion in form of debt, credit guarantee or equity.

“Proposals can be across a variety of sectors, including without limitation, healthcare, agribusiness/food security, financial services, transportation, logistics, energy, ICT, and manufacturing,” notes the information provided by deal room partner Asoko Insight.

Moreover, to qualify for the funding, DFC has spelled out other conditions the company or project must satisfy where for instance other than being majority-owned and -controlled by the private sector, the company must have been operational for at least two full calendar years with annual revenues greater than Sh200 million in at least one of the past two years.

On the other hand, the project specifically must be focused on activities directed at supporting economic recovery efforts in sub-Saharan Africa amid the Covid-19 pandemic.

Also upon acceptance, the project will receive funding for not more than 60 per cent of the total financing needs.

“Direct equity proposals must be for proposed ownership interest of 30 percent or less. DFC will not consider requests for acquisition financing, refinancing, transactions solely for working capital, or equipment or trade/export finance,” read the caveats in part.

Other details show that interested companies or projects are expected to submit their proposals through the Asoko Insight platform for initial vetting.

“Submissions that meet the criteria will then be reviewed by DFC’s regional team of Africa investment advisors for consideration to begin due diligence on the opportunity. Submissions that don’t meet the criteria will still be informed, as they may be eligible for other dealrooms,”read the conditions in part.

DFC is America’s development bank. To achieve its objectives, DFC partners with the private sector to finance solutions to the most critical challenges facing the developing world.

With Sub-Saharan Africa as a priority, the bank has approximately Sh870 billion invested across more than 300 projects.